Truck Ins. Exchange v. Bennett

• Decision Date: 27 February 1997
• Docket Number: No. B090428,B090428
• Citation: 53 Cal.App.4th 75,61 Cal.Rptr.2d 497
• Court: California Court of Appeals Court of Appeals
• Parties: , 97 Cal. Daily Op. Serv. 1502, 97 Daily Journal D.A.R. 2196 TRUCK INSURANCE EXCHANGE, et al., Plaintiffs and Respondents, v. Peter C. BENNETT, Defendant and Appellant.

Page 497

61 Cal.Rptr.2d 497

53 Cal.App.4th 75, 97 Cal. Daily Op. Serv. 1502,

97 Daily Journal D.A.R. 2196

TRUCK INSURANCE EXCHANGE, et al., Plaintiffs and Respondents, v. Peter C. BENNETT, Defendant and Appellant.

No. B090428.

Court of Appeal, Second District, Division 3, California.

Feb. 27, 1997.

Certified for Partial Publication ^*.

Review Denied June 18, 1997.

Troop Meisinger Steuber & Pasich, Curtis D. Porterfield, Clyde M. Hettrick and Stephen V. Masterson, Los Angeles, for Defendant and Appellant.

Law Offices of Robert N. Benjamin, Robert N. Benjamin and Florence Tavi Brignac, Glendale; Benjamin, Lugosi & Benjamin and Robert N. Benjamin, Glendale; Knapp, Petersen & Clarke and Gail S. Cooper-Folb, Glendale; Hawkins, Schnabel, Lindahl & Beck and Kelley K. Beck, Los Angeles; Haight, Brown & Bonesteel, Roy G. Weatherup and Jules S. Zeman, Santa Monica, for Plaintiffs and Respondents.

KITCHING, Associate Justice.

INTRODUCTION

In the published portion of this opinion, we hold that a personal injury liability clause does not provide coverage for a cause of action for disparagement of title or slander of title brought against the insured. In the unpublished portion of this opinion, we find that under the circumstances of this case, the insurers did not waive their right to assert lack of coverage and to withdraw from defending the insured, and they were not estopped from doing so. We affirm a grant of summary judgment in favor of insurers in their suit seeking a declaration that they had no duty to defend and indemnify the insured against claims made against him in an underlying action.

PROCEDURAL HISTORY

The relevant procedural events in this complex case are as follows: On March 24, 1986, Kenneth J. Roberts ("Roberts") and Mandeville Broadcasting Company ("Mandeville") filed a complaint ("the Roberts action") against Peter C. Bennett ("Bennett"). The Roberts complaint ¹ alleged that Bennett had wrongfully claimed an ownership interest in radio station KROQ-FM as compensation for his services as Roberts's attorney during the period in which Roberts acquired the Burbank Broadcasting Company ("Burbank"), the entity which formerly owned radio station KROQ-FM. Among many other causes of action, the Roberts complaint contained a "disparagement of title" cause of action. Truck Insurance Exchange ("Truck") and other insurers had issued insurance policies to Bennett. Bennett demanded that Truck and the other insurers provide him with a defense to the Roberts action, indemnify Bennett, and pay legal fees.

Bennett also cross-complained, alleging 47 causes of action against Roberts, Mandeville, and other defendants.

In the action which gives rise to this appeal, Truck and other plaintiff insurers filed a complaint for declaratory relief (Code.Civ.Proc., § 1060) alleging two declaratory relief causes of action against Bennett. The declaratory relief causes of action alleged that although Truck and the other plaintiff insurers had provided a defense to the Roberts action pursuant to a complete reservation of rights, they denied any obligations under the insurance policies to defend or indemnify Bennett. A third cause of action sought declaratory relief against Charter Oak Fire Insurance Co. ("Charter Oak"), Associated Indemnity Insurance Company ("Associated"), and several other insurer defendants. It alleged that these insurers issued insurance policies to Bennett which provided coverage Several parties filed cross-complaints. On February 6, 1989, pursuant to Bennett's motion, the trial court ordered proceedings stayed in the declaratory relief action filed by Truck and the other insurers.

for defense and/or indemnity to him arising out of the breach alleged in the Roberts action. The third cause of action alleged that although the Roberts action had been tendered to these defendant insurers for defense and indemnity, only Truck and two other plaintiff insurers provided a defense in the Roberts action.

Before the Roberts action was tried, Roberts dismissed his complaint against Bennett with prejudice. Trial proceeded on Bennett's cross-complaint against Roberts. At the close of Bennett's case, the trial court granted Roberts's motion for nonsuit and dismissed all causes of action except those for quantum meruit and fraud. A February 5, 1991, judgment awarded Bennett $950,000 damages on his cross-complaint for recovery of legal fees against Roberts. The Court of Appeal ² reversed the judgment on the cross-complaint against Roberts and remanded the matter with directions for the trial court to conduct a new trial on damages.

After the stay in Truck's declaratory relief action was lifted, the trial court granted summary judgment motions in favor of Truck, Associated, and Charter Oak. Bennett filed a timely notice of appeal. Respondents are Truck, Associated, and Charter Oak.

STANDARD OF REVIEW

The summary judgment motions were filed and ruled on by the trial court in 1992. Amendments to the summary judgment statute, Code of Civil Procedure section 437c, did not become effective until January 1, 1993. We therefore apply the standard of review according to the statute as it stood in 1992. (Montrose Chemical Corp. v. Superior Court (1993) 6 Cal.4th 287, 301, fn. 4, 24 Cal.Rptr.2d 467, 861 P.2d 1153.)

As a summary judgment motion raises only questions of law regarding the construction and effect of supporting and opposing papers, this court independently applies the same three-step analysis required of the trial court. We identify issues framed by the pleadings, we determine whether the moving party's showing established facts that negate the opponent's claim and justify a judgment in the moving party's favor, and if it does, we finally determine whether the opposition demonstrates the existence of a triable, material factual issue. (AARTS Productions, Inc. v. Crocker National Bank (1986) 179 Cal.App.3d 1061, 1064-1065, 225 Cal.Rptr. 203.)

In an appeal from a summary judgment, this court independently reviews the trial court's determination of questions of law. The trial court's stated reasons supporting its ruling do not bind this court, which reviews the ruling, not its rationale. (Stratton v. First Nat. Life Ins. Co. (1989) 210 Cal.App.3d 1071, 1083, 258 Cal.Rptr. 721.)

ISSUES

The published portion of this opinion addresses Bennett's claim that because personal injury liability clauses in policies issued by Charter Oak, Truck, and Associated contained the words "disparaging" or "slander," those personal injury liability clauses provided coverage for claims made against him in the Roberts action for disparagement or slander of title.

The unpublished portion of this opinion addresses whether a triable issue of fact existed concerning waiver and estoppel which would prevent Charter Oak from withdrawing from Bennett's defense.

DISCUSSION

1. The Personal Injury Liability Clauses in the Charter Oak, Truck, and Associated Policies, and Roberts's Disparagement of Title Claims Against Bennett

The main issue in this appeal concerns whether the personal injury liability clauses provided coverage for Roberts's disparagement of title claim against Bennett. We summarize the law concerning an insurer's duty to defend, the relevant allegations in the Roberts complaint, and the personal injury liability clauses.

a. The Duty to Defend

An insurer has a duty to defend an insured if it learns from the complaint, or otherwise ascertains, facts that give rise to the potential of liability under the policy. (Gray v. Zurich Insurance Co. (1966) 65 Cal.2d 263, 276-277, 54 Cal.Rptr. 104, 419 P.2d 168.) The duty to defend is broader than the duty to indemnify; an insurer may owe a duty to defend an insured in an action in which no damages are awarded. The determination whether the insurer owes a duty to defend is made by comparing the allegations of the complaint with the terms of the policy. Facts known to the insurer and extrinsic to the complaint also give rise to a duty to defend when they reveal a possibility that the policy may cover the claim. The existence of an insurer's duty to defend turns upon the existence of facts known by the insurer when the third party begins the lawsuit against the insured. (Montrose Chemical Corp. v. Superior Court, supra, 6 Cal.4th at pp. 295-296, 24 Cal.Rptr.2d 467, 861 P.2d 1153.)

To prevail in an action seeking declaratory relief on the issue of the duty to defend, the insured must prove the existence of a potential for coverage, while the insurer must establish the absence of any such potential. "[T]he insured need only show that the underlying claim may fall within policy coverage; the insurer must prove it cannot." (Montrose Chemical Corp. v. Superior Court, supra, at p. 300, 24 Cal.Rptr.2d 467, 861 P.2d 1153; italics in original.)

The duty to defend, although broad, is not unlimited; it is measured by the nature and kinds of risk covered by the policy. Interpretation of an insurance policy is a question of law. Interpretation of the policy must give effect to the parties' mutual intention, insofar as it can be inferred, where possible, solely from the policy's written provisions. (Waller v. Truck Ins. Exchange, Inc. (1995) 11 Cal.4th 1, 18-19, 44 Cal.Rptr.2d 370, 900 P.2d 619.)

b. Allegations in The Complaint in the Roberts Action

The particular allegations of the complaint in the Roberts action, as supplemented by facts from the Court of Appeal opinion in Bennett v. Roberts, are set forth as they relate to Bennett's claims on appeal.

Roberts was the sole shareholder of Mandeville, which owned and operated radio station KROQ-FM until September 19, 1986.

By November 1973, Burbank Broadcasting Company had acquired AM and FM licenses to radio station KROQ-FM in Los Angeles. Roberts invested in Burbank during the early 1970's, a period during which Burbank's financial condition worsened, partners in Burbank engaged in litigation, and the two radio stations ceased to broadcast...